This workshop is an introduction to pensions for those with little or no previous pensions knowledge, working either in a pensions role or an allied business area where pensions knowledge would be advantageous. Our expert panel will talk through the essentials of the pensions industry.

For over forty years, the Pensions Management Institute has provided its members and wider society with information and insight, regarding pensions and employee benefits through its regular events, seminars and our member magazine.

Lots of savers around the world don't engage with pension communications, particularly those that have been automatically enrolled. The approach's use of inertia means that these savers tend to have lower levels of awareness and engagement compared to those who made an active decision to start saving in a scheme.

Researchers have become focused on the challenge of how to engage pension savers, and in recent years a lot of progress has been made. One idea is to time pension communications more effectively so the message reaches the saver during important life events when they're believed to be more receptive.

NEST Insight, along with Maastricht University and Netspar, recently conducted a series of in-depth interviews, and a survey with NEST members, to find out more.

Pensions In-Depth: Video interview with Vince Linnane

In the latest of PP's Pensions In-Depth interviews, Jonathan Stapleton talks to Pensions Management Institute chief executive Vince Linnane about launching new qualifications and the future of the industry

JONATHAN STAPLETON: The Pensions Management Institute has been making many changes and looking at new initiatives over the past few months. Could you tell us a little more about these?

VINCE LINNANE: One of the most interesting pieces of work that we have been doing with one of the country’s third-party administrators is working on new qualifications for pensions administrators.

They are actually set at levels two and three, below the current level for the Qualification in Pensions Administration or Diploma in Pension Calculations qualifications, which are at level four. The new level two award is roughly five units and the level three award is a certificate where we are looking at companies being able to choose ten from a greater number – 17 or 18 units – that fit their own business needs.

Currently, administrators that have zero to two years experience are not being benchmarked against a qualification status. We hope these new qualifications will improve the transparency of the ability of those employees, and also their transferability because, clearly, they’re a very fluid and flexible workforce that does move around, and it will undoubtedly help raising standards in the pensions administration area if this level of workforce can be properly monitored against qualification standards for the first time.

JONATHAN STAPLETON: Providing a real career progression path in qualifications to support third-party administrators?

VINCE LINNANE: Yes, indeed. We have had a 20-year history of operating qualifications for pensions administrators at level four, but that tends to be taken by administrators who have on average about three years-plus experience already. This is for levels of administrators below them, and we think that it’s an important area in the market, a niche area, that needs to be filled and clearly will be working.

JONATHAN STAPLETON: I understand you are also making changes to your entry level qualification, the Retirement Provision Certificate?

VINCE LINNANE: Clearly, there is a need for human resources, employee benefits, payroll people to be interfacing more than is probably the case at present. We introduced the Retirement Provision Certificate in 2003 to cater for that market.

What we are now looking at is whether we can link it up with two other subjects in the PMI syllabus – Pension Arrangements at the 200 level and Total Remuneration at the 300 level – and effectively have a PMI pensions qualification for non-pensions people.

This is a very exciting idea that our education committee is working on, and we hope to have a fleshed-out syllabus put together in a couple of months,. We will then be sounding out those other institutes and people who are tangentially involved in pensions in the areas I’ve just described to see whether or not they think it will meet their own requirements as somebody who needs to know an increasing amount of pensions, but doesn’t necessarily want to take the PMI’s full advanced diploma.

JONATHAN STAPLETON: What else are you examining at the moment?

VINCE LINNANE: The other area we are looking at is what particular seminars in the run up to 2012 are going to be required. Our initial thoughts on this are clearly auto-enrolment, data cleansing, the higher earners and tax issues. And, again, we hope to be able to announce a seminar programme involving those in the next few weeks.

Finally, a very exciting development for us is that PMI is about to appoint its first ever business development executive, Terri-Ann Humphreys, whose last role was head of marketing at Buck Consultants, to take our products to the market and to find out key client reaction to those initiatives.

JONATHAN STAPLETON: You were mentioning about 2012 – how much of an impact will that have on PMI members?

VINCE LINNANE: We recently conducted a survey with Standard Life that indicated PMI members don’t necessarily feel NEST is going to impact too much on either the schemes they advise or the schemes they manage or administer. Clearly, that might be because PMI members – be they consultants or managers – tend to be at the top end of the market.

But, clearly, at the time the survey was conducted, which was earlier this summer, very few of our members who responded to it felt that NEST was going to make a big impact in either replacing what it was that they had, or even the NEST levels of payment being used as benchmarks for companies to dumb down.

Despite this, NEST is going to be a very interesting development because it is going to bring millions of people into contact with pensions who’ve never been that close to it before. There is going to be a lot of scope for education provision, which, hopefully, PMI is in an ideal place to assist with.

JONATHAN STAPLETON: How are PMI members feeling about the future of the industry?

VINCE LINNANE: Well, we conducted a career development survey to our members earlier this summer – which had 642 responses. There were quite a lot of very interesting facts as far as we’re concerned. For example, the average salary for PMI members was £14,000 higher than the average salary for non-members.

This supports our view that professional qualifications will undoubtedly stand your career in good stead in the pensions industry.

The other significant development is the survey showed that PMI members also mirror the general trend in the industry, going from defined benefit to defined contribution. Currently, while there are 41% of PMI members who felt they were either exclusively or predominantly working on DB pensions, when we asked them to predict what was going to happen three years down the line, that 41% fell to 17%.

I think there were 45% of members said that they worked on roughly an equal mix of DB, DC and felt that that number was going to increase, with DC having the lion’s share of the mix, going up to 65%.

The number of respondents who work exclusively on DC pensions – which at the moment is quite small at 8% – is going to double in the next three years to more than 17%. So the future over the next few years is going to be a move away from DB to DC. That is already being picked up by our members, and, clearly, we’ve got to move accordingly.

JONATHAN STAPLETON: How confident are you that the PMI and its members will be able to adapt to that change?

VINCE LINNANE: Well, I believe the key word you’ve used there, Jonathan, is adapt. In Darwin’s evolutionary theory the people who adapt are the people who survive. And the institute is increasingly showing, via its modular structure for its qualifications, its willingness to consider how these qualifications need to get customised to suit the market better.

We are running DC as much as DB, certainly in our vocational qualifications, where that has always been the case, and, I think, the area that we will increasingly need to take on board – with our syllabus, our qualifications, our publications and our events. That means pensions are no longer going to be a discrete entity, but will be part of a wider savings pool. That is going to be the key message PMI takes onboard and runs with, going forward.

JONATHAN STAPLETON: How do you see the PMI looking in 2012, in 2020?

VINCE LINNANE: Well, there’s a lot of time between now and 2012, but looking slightly longer term into the future, into 2020, the point everybody acknowledges about pension schemes is that they do have a very long shelf life. So I think that there will be a core selection of PMI members that will still be working on DB legacy issues; you can’t just wave a magic wand at these and make them go away.

The point I referred to in the previous comment about pensions no longer being a discrete savings vehicle in its own right, but part of a larger saving for retirement pool, is something the institute certainly needs to address. While ‘pensions’ is currently a devalued word, in ten years’ time it is one I sincerely hope has come back into favour, because it does have the uncommon virtue that in a lexicon of financial vocabulary it’s one the man in the street easily understands.

JONATHAN STAPLETON: The PMI won’t be changing it’s name in the future then?

VINCE LINNANE: Name changes are always difficult, I think that you’re in danger of losing as much as you gain from a name change. I don’t rule it out totally, but I think, as I said, in a decade we’ve gone, if you like, from a situation where pensions at the end of the 1990s were generally very favourably looked on, to a situation where they have currently lost the trust for a great deal of the public.

We would need to re-engage and re-invigorate and re-energise them, so that we re-establish that connection. There’s a lot of ‘re’ words there, but, hopefully, people will buy into that.

Going forward, the PMI will be looking at areas beyond where it currently draws its members, into establishing what is happening for off-shoring and the role we can play there. It will also look at what changes the public sector pensions, if they are to be run more along private sector lines, will open up for PMI.

Finally, I think the institute has long valued its volunteer pool of people who come forward as examiners and tutors, and stand for council and sit on the board. My plea for 2020 would be long may that situation continue, because without new talent, new people coming through into PMI, we wouldn’t be able to make the progress we have over 40 years; and, hopefully, see out the next 40.

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